Operators, OTT providers can work together to boost connectivity, profits

By Tom Jackson, South Africa

Operators and over the top (OTT) service providers such as Facebook and Twitter can work together to boost connectivity in Africa as well as their own profits without cannibalising their businesses, panelists agreed at the AfricaCom conference in Cape Town, South Africa.

Speaking on a panel during the opening keynotes of the continent’s biggest technology conference, which is ongoing, representatives from both the operators and the OTT providers said more could be achieved through working together than separately.

Panelists were in agreement that everyone stood to benefit from getting more people online, and that neither operators nor the likes of Facebook, Twitter and WhatsApp needed to lose out if the correct levels of cooperation occurred.

“We want to do everything that helps our customers dream, work and achieve. It is still very early days for the internet in Africa and we have to support it,” said Arthur Bastings, executive vice president for Africa at Millicom. “It is probably not right now the time to talk about cannibalisation as in mature markets. There’s a lot to do to get consumers on the internet. If we look at cannibalisation that is probably five years out.”

Bastings said currently the increase in internet penetration in Africa meant customers were using all mobile services more, including voice, so operators need not consider OTT services a threat to SMS revenues if they were playing a role in getting more people online.

Representing the OTT service providers was Chris Daniels, vice president of product for Internet.org at Facebook, who agreed with Bastings that services such as Facebook need not constitute a threat and would help boost penetration in the long term.

“When people access Facebook on their phones they are paying an operator for the data access,” he said. “Internet in Africa is very early days and we’re not even out of the first innings.”

Ahmed Farroukh, chief executive officer (CEO) of MTN South Africa, said all players working together created a “win-win situation”.

“We need this type of cooperation,” he said. “The only issue is how we can do this to the benefit of both our operations and most importantly to the benefit of our stakeholders. We can give free access, but at the end of the day there is a cost.”

The panelists agreed there were now greater levels of cooperation between the two parties, with both realising the role the other could play in boosting connectivity and acquiring more customers.

“The relationship with a so-called OTT player is evolving. We are now coming together,” said Christian de Faria, chief executive officer (CEO) of Airtel Africa.

“We are pretty much working together with Facebook and Twitter. They are here to stay. We are in the phase where together with Facebook and Twitter we are looking at monetisation. And so far, for example in Zambia and Kenya, we are getting there.”

De Faria said he did not think customers using WhatsApp or Facebook cannibalised SMS revenue, with operators realising the behaviour of the customer is changing and they had to adapt if they wanted to offer a value proposition. He also said OTT players were demonstrating far greater willingness to come to the table and understand problems faced by operators.

Daniels expressed Facebook’s awareness of the issues faced by operators in rolling out connectivity while also maintaining their margins.

“Any proposition that you put on the table that doesn’t make money for operators won’t make sense,” he said. “If operators aren’t making money they aren’t going to be able to build the infrastructure to get people online. We really respect what operators have done.”

Marc Rennard, executive vice president for Africa, Middle East and Asia at Orange Group, said the model was currently working fine, but felt there may be some tension from time to time as people pay the telecoms in order to use OTT services. For now, however, he said OTT players were increasing their growth and the telecoms were profitable.

“But if you want to reach the next three billion customers, we need to reduce cost, we need to have all the stakeholders in this ecosystem participating,” he said. “We need to sit around a table and think not “who will pay?” but rather “how do we reduce cost?””

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